2025 (1) TMI 801 - AT - Benami Property

Property attachment order overturned as alleged benamidar paid money but gained no rights under Section 2(9)(A)

The Appellate Tribunal under SAFEMA at New Delhi set aside a provisional attachment order in a benami property case. The tribunal found that out of Rs. ... Prohibition of Benami Property Transactions - beneficial owner of subject property - HELD THAT:- We note that out of the total sale consideration of Rs.2.35 Crores for the impugned property only Rs.1.94 Crores was paid by the alleged Benamidar. The interested party M/s North Star Homes has also maintained that the Benamidar has not acquired any rights, interest and title to the impugned property. Therefore M/s North Star Homes continue to remain owner and in possession of the impugned property. The applicability of Section 2 (9) (A) is doubtful as neither the impugned property was transferred to the alleged Benamidar nor the impugned property was held by the alleged Benamidar. Even if we accept that there were cash infusions into the bank accounts of the alleged Benamidar, there is no evidence on record as to show that such infusions were made by the Beneficial Owner. We find that neither the property which has been provisionally attached is Benami nor the transaction which has occurred with respect to the impugned property is Benami. We therefore set aside the Impugned Order. 1. ISSUES PRESENTED and CONSIDEREDThe judgment primarily addresses the following legal issues:Whether the property in question was held as 'Benami' under the Prohibition of Benami Property Transactions Act, 1988 (PBPTA).Whether the provisional attachment of the property by the Adjudicating Authority was justified.Whether the transaction involving the property was valid given the partial payment and lack of a registered sale deed.The applicability of Section 54 of the Transfer of Property Act, 1882 concerning the Agreement to Sale.Whether the amendments to the PBPTA could be applied retrospectively to the transaction.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Whether the property was held as 'Benami'Relevant legal framework and precedents: The PBPTA defines a 'Benami' transaction as one where the property is held by one person but paid for by another. The Act prohibits such transactions unless they meet specific exceptions.Court's interpretation and reasoning: The court found that the alleged Benamidar, M/s Padmanabha Marktech Pvt. Ltd., did not hold the property on behalf of Shri Rachakonda Srinivas Rao. The partial payment and lack of a registered sale deed meant that the property was not transferred or held by the alleged Benamidar.Key evidence and findings: The court noted the partial payment of Rs. 1.94 Crores out of a total of Rs. 2.35 Crores and the absence of a registered sale deed. It also considered the lack of evidence showing that the funds were provided by the alleged beneficial owner.Application of law to facts: The court applied Section 2(9)(A) of the PBPTA and concluded that the transaction did not meet the criteria for a Benami transaction.Treatment of competing arguments: The court considered the respondent's argument that the transaction was a means to introduce unaccounted money but found no supporting evidence.Conclusions: The court concluded that the property was not held as Benami.Issue 2: Provisional attachment of the propertyRelevant legal framework and precedents: Under Section 24(4)(b)(i) of the PBPTA, the Initiating Officer can provisionally attach property suspected to be Benami.Court's interpretation and reasoning: The court found that the provisional attachment was not justified as the property was not held as Benami.Key evidence and findings: The court noted the lack of evidence linking the funds used for the transaction to the alleged beneficial owner.Application of law to facts: The court applied the provisions of the PBPTA and found that the conditions for provisional attachment were not met.Treatment of competing arguments: The court dismissed the respondent's argument that the transaction was an attempt to circumvent the law.Conclusions: The provisional attachment was set aside.Issue 3: Validity of the transactionRelevant legal framework and precedents: Section 54 of the Transfer of Property Act, 1882, states that an Agreement to Sale does not create an interest in the property.Court's interpretation and reasoning: The court reiterated that an Agreement to Sale does not transfer ownership or interest in the property.Key evidence and findings: The court relied on precedents from the Supreme Court, affirming that an Agreement to Sale does not confer property rights.Application of law to facts: The court found that the transaction was not complete as the sale deed was not executed.Treatment of competing arguments: The court acknowledged the appellant's argument that the agreement did not confer ownership.Conclusions: The transaction was not valid as a transfer of property rights.Issue 4: Retrospective application of PBPTA amendmentsRelevant legal framework and precedents: The amendments to the PBPTA came into force on 1st November 2016.Court's interpretation and reasoning: The court held that the amendments could not be applied retrospectively to transactions prior to the amendment date.Key evidence and findings: The court noted that the Agreement to Sale was executed before the amendments came into force.Application of law to facts: The court concluded that the amendments did not affect the transaction.Treatment of competing arguments: The court dismissed the respondent's argument for retrospective application.Conclusions: The amendments did not apply to the transaction.3. SIGNIFICANT HOLDINGSVerbatim quotes of crucial legal reasoning: 'An agreement to sell does not create an interest of the proposed vendee in the suit property. As per Section 54 of the Act, the title in immovable property valued at more than Rs 100 can be conveyed only by executing a registered sale deed.'Core principles established: An Agreement to Sale does not confer ownership or interest in property. The PBPTA amendments cannot be applied retrospectively.Final determinations on each issue: The property was not held as Benami, the provisional attachment was unjustified, the transaction was invalid without a registered sale deed, and the PBPTA amendments did not apply retrospectively.